Critical Analysis: HDFC Bank (NYSE:HDB) vs. Scully Royalty (NYSE:SRL)

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HDFC Bank (NYSE:HDB) and Scully Royalty (NYSE:SRL) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their earnings, profitability, analyst recommendations, valuation, risk, dividends and institutional ownership.

Profitability

This table compares HDFC Bank and Scully Royalty’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
HDFC Bank 18.25% 14.02% 1.73%
Scully Royalty N/A N/A N/A

Valuation & Earnings

This table compares HDFC Bank and Scully Royalty’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
HDFC Bank $16.56 billion 6.79 $3.18 billion $1.66 37.33
Scully Royalty $107.82 million 1.56 $86.62 million N/A N/A

HDFC Bank has higher revenue and earnings than Scully Royalty.

Dividends

HDFC Bank pays an annual dividend of $0.41 per share and has a dividend yield of 0.7%. Scully Royalty does not pay a dividend. HDFC Bank pays out 24.7% of its earnings in the form of a dividend.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for HDFC Bank and Scully Royalty, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
HDFC Bank 0 1 1 0 2.50
Scully Royalty 0 1 0 0 2.00

HDFC Bank currently has a consensus target price of $128.63, indicating a potential upside of 107.57%. Given HDFC Bank’s stronger consensus rating and higher probable upside, analysts clearly believe HDFC Bank is more favorable than Scully Royalty.

Institutional & Insider Ownership

18.0% of HDFC Bank shares are held by institutional investors. Comparatively, 0.4% of Scully Royalty shares are held by institutional investors. 1.0% of HDFC Bank shares are held by company insiders. Comparatively, 1.9% of Scully Royalty shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

HDFC Bank beats Scully Royalty on 11 of the 13 factors compared between the two stocks.

HDFC Bank Company Profile

HDFC Bank Limited provides a range of banking and financial services to individuals and businesses in India, Bahrain, Hong Kong, and Dubai. The company operates in Treasury, Retail Banking, Wholesale Banking, and Other Banking Business segments. It accepts savings accounts, salary accounts, current accounts, fixed and recurring deposits, demat accounts, safe deposit lockers, and rural accounts, as well as offshore accounts and deposits. The company also offers personal, business, home, consumer durable, car, two wheeler, gold, educational, rural, and term loans; loans for professionals; loans against property, securities, and assets; overdrafts; government sponsored programs; and working capital, healthcare, channel, short term, structured, dealer, and vendor finance, as well as agricultural lending. In addition, it provides credit, debit, and prepaid cards; private banking services; export, import, remittance, bank guarantees, and letter of credit services, as well as merchant and cash management services; life, health, motor, travel, and home insurance products; and investment products, such as mutual funds, equities and derivatives, IPOs, and bonds. Further, the company offers bill discounting, real time gross settlement, bankers to right/public issue, forex, money market, employees trusts, and tax collection services; and investment banking services in the areas of project appraisal, structured finance, loan syndication, debt capital markets, equity placement, mergers and acquisitions, corporate advisory, and capital market advisory services. Additionally, it provides correspondent banking, settlement, custodial, disbursement, clearing, and administrative and fiduciary support services, as well as online and mobile banking services. As of February 18, 2019, the company had 5,000 branches in India. HDFC Bank Limited was founded in 1994 and is based in Mumbai, India.

Scully Royalty Company Profile

Scully Royalty Ltd. operates as a merchant banking company worldwide. The company operates through two segments, Merchant Banking and All Other. The Merchant Banking segment includes interest in an iron ore mine, captive supply assets and financial services, proprietary investing activities, and hydrocarbon interests. This segment holds various production assets, including a zinc alloy processing facility located in Slovakia; a hydro-electric power plant located in Africa; a non-ferrous rolling mill in Germany; and hydrocarbon production and processing assets in Canada, as well as a mining sub-lease of the lands upon which the Scully iron ore mine is situated in Newfoundland and Labrador, Canada. This segment also offers specialty banking services with a focus on merchant banking products and services for corporations and institutions. The All Other segment is involved in the business activities related to medical equipment, instruments, supplies, and services. The company was formerly known as MFC Bancorp Ltd. and changed its name to Scully Royalty Ltd. in June 2019. Scully Royalty Ltd. was incorporated in 2017 and is based in Central, Hong Kong.

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